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The USD/JPY pair rebounded in the short term but the bias remains bearish. You knew from my previous analysis that the price action developed a Head & Shoulders pattern which could trigger more declines.
Fundamentally, the US reported better-than-expected data but the USD remains weak in the short term. The PPI, Core PPI, Prelim UoM Consumer Sentiment, and the Final Wholesale Inventories came in better than expected.
Still, the USD is sluggish as the US is to release its inflation data on Tuesday and most important, the FED is expected to increase the Federal Funds Rate by 50 bps on Wednesday.
Technically, the bias remains bearish as long as it stays under the downtrend line. As you can see, the rate dropped below the neckline but it has failed to stabilize under the weekly pivot point of 135.94.
It's trapped between 136.88 and 135.76 levels. Escaping from this pattern could bring new opportunities.
Staying below the neckline (minor broken uptrend line) and under 136.88, USD/JPY could slip lower. Breaking below 135.76 and making a new lower low activates more declines and is seen as a selling signal.
Jumping and stabilizing above the 136.88 static resistance invalidates the Head & Shoulders pattern.
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